5 SaaS Spend Management Tips for Managing Subscriptions

You might be familiar with the situation from your own business – employees in different departments across the organization freely subscribe to and use various SaaS applications that solve their day to day tasks. More than often this practice is not properly sanctioned by a controlling instance such as the IT department, resulting in a phenomenon called SaaS sprawl. This means that with the time, unused, duplicate or simply expensive subscriptions amass until your company is wasting a substantial amount of money on SaaS.

 this article, we have compiled 5 simple ways proper SaaS Spend Management can help you tackle the pitfalls of SaaS sprawl:

SaaS applications are often easy to deploy without the need for centralized implementation by IT teams. For example, your marketing team can purchase a new tool using a company credit card, start using the tool in minutes, without needing to notify an IT team. 

There are benefits to this: your team can move quickly, and no one is being limited by unnecessary red tape. But, it can lead to problems. IT departments may be unaware of all the software installed and used by the company. This is known as shadow IT

 A solution to this problem is a SaaS management platform. It allows you to see what software you have, and how many people actually use it, and what you’re spending, so you can clearly see any under or over-utilization. You can make sure you’re not paying for more than you need, but also not leave yourself short of the right licenses for when audit season comes around. Additionally you should invest in building a policy that mandates every non-IT staff member to gain IT approval before purchasing any SaaS subscription.

2. Improve SaaS utilization rate

SaaS licenses comprise a significant portion of an organization’s tech budget, and poor utilization may lead to a tremendous money loss.

Unfortunately, there are seldom any checks and balances on the proper utilization of Saas licenses, making it one of the most neglected areas in an organization. CEOs and SaaS executives may report that their staff is making the most of the software.

Still, the truth is that the utilization rates are lower than anticipated. These companies can save quite a lot of money by ensuring that they only pay for SaaS apps that are actually being used.

Organizations must find ways to take advantage of open opportunities and see where SaaS applications are being used the most, where they aren’t being used, and how they can get the most out of their software investments. For example, no matter how efficient your organization is in acquiring a SaaS subscription, unless all your employees are on board and know how to use it, you cannot benefit from the SaaS product, and it will ultimately be a bad investment.

One of the most effective ways of getting the most for your money is to train employees to use the new subscription and turn team leaders into product advocates. Team leaders should experiment and work with the product to encourage other people to use it efficiently.

3. Cancel unused SaaS licenses

Constant vigilance is required to fix any discrepancies in SaaS payments and subscriptions. For example, when an employee quits from an organization, the IT department may forget to cancel their SaaS licenses, and as a result, the company keeps paying for their privilege even though it is not being used.

This can amount to a significant SaaS waste, especially for large organizations where SaaS applications are used across different departments.

One way to manage unused licenses through your spend management software is to maintain an onboarding and offboarding flow. Every time an employee quits, the workflow can give IT a complete list of SaaS applications and tools that the employee was using to cancel those subscriptions.

Furthermore, subscription for duplicate apps is also a common issue that increases SaaS Misspending. It so happens that two different departments in an organization end up buying a SaaS subscription of the same app. This usually occurs when the IT department isn’t involved in the process of acquiring the subscription, so two departments are ultimately paying for the same subscription twice.

4. Watch out for automatic renewals

Automatic renewals are a considerable risk for organizations and their budget that don’t have clear app ownership. Many SaaS tools issue automatic renewals so companies wouldn’t have to go through the subscription process pro-actively.

For example, your organization’s marketing department asks IT to buy a new SaaS tool. It purchases the tool with a 6-month subscription. However, the marketing department stops using that software after the first three months and forgets to report this change to the IT department. Every 6 months, the SaaS to auto-renews its subscriptions, resulting in a significant amount of SaaS waste.

To ensure that automatic subscription renewals don’t occur, avoid buying tools that have an automated subscription only. Secondly, use a SaaS management system to automate your workflows and add and delete any new SaaS tool that an employee subscribes and unsubscribes to.

5. Monitor SaaS ROI

Vendor management plays a vital role in SaaS spend management system. It includes tracking the use and cost of the software and analyzing the return on investment. This can help you deduce which SaaS applications in your organizations give you the biggest bang for your buck. 

Organizations need not pay for applications that cost a lot and provide little assistance in business processes. Instead, invest in software that truly helps your company make your business processes more efficient and give you a more significant ROI.

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